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September 10, 2021 – New rally on the commodity markets. Nickel and aluminum continue to rise. At a glance: What currently drives stainless steel and aluminum prices? Bauxite and aluminum: The European Union and its difficult relationship with raw materials. A ray of hope on the logistics horizon. And the race for AST is becoming more concrete.

Stainless Espresso: What is driving stainless steel and aluminum prices in 2021?
Stainless Espresso: What is driving stainless steel and aluminum prices in 2021?

New rally in commodities

Already in the past few days, the non-ferrous base metals had made strong gains on the commodity exchanges. On yesterday’s Thursday and also today, they have then once again risen significantly. LME aluminum futures are at an all-time high of more than $2,850 per ton. Nickel has once again risen significantly and stands on the LME at about $ 20,500 per ton. On the SHFE, the metal prices look quite similar, but the gains here are even higher. Nickel is up about 3% and aluminum is up about 2%.

Source: lme.com, shfe.com.cn

What currently driving aluminum prices?

The further increase in aluminum can be linked to concerns about the bauxite supply from Guinea. After the coup of the military there, not only China but also the Europeans are facing possible supply shortages of the most important raw material for aluminum – bauxite. The European aluminum industry obtains more than 63% of its bauxite requirements from the African country.

Aluminum deficit already at one million tons

Further influence on the aluminum prices takes on the one hand the currently very high demand in the industrial nations and the production problems in China, released by measures of the Chinese government in the fight against the climatic change and energy shortage. Overall, the world is already facing an aluminum deficit of around 1,000,000 tons.

What is currently driving stainless steel prices?

Stainless steel has been in short supply worldwide since the end of 2020. In Europe and the United States, it is also favored by high market protection measures, such as Safeguard or Section 232, but also by dozens of anti-dumping measures. The high demand has emptied the stocks and for many companies it has become very problematic to replenish them in the domestic market. Imports are difficult and real experts are scarce.

China slashes stainless steel production

To this end, the world’s largest producer of stainless steel, China, is putting the brakes on steel production and has already cut crude steel production by millions of tons in 2021. This results in a simple economic principle: high demand meets low supply – prices rise.

Stainless steel raw materials also in short supply

Raw materials for stainless steel production, such as nickel, chrome, iron ore and coking coal, have also more than rallied in price in 2021, often setting new all-time highs. In addition, nickel demand, especially from the electromobility sector, has once again increased strongly and supply is still tight.

Currently no relief in sight for stainless steel and aluminum

At present, it does not look as if a decline in prices for stainless steel and aluminum is to be expected. In other sectors, too, raw materials such as wood, cement and steel remain in short supply. But this is not the case everywhere. Some industries are reporting the targeted build-up of high inventories to better cushion any shortages that may occur and to be able to supply customers reliably even in such times.

Bauxite and aluminum: The European Union and its difficult relationship with raw materials

The EU has a problem: raw materials. Just under 20% of Europe’s bauxite needs can be mined in the economic union. The remaining 80% of bauxite must be imported. Thus, the aluminum raw material is on the EC’s red list and has been since 2019. According to the European Commission’s latest Critical Raw Materials report, 63% of it comes from Guinea.

EU faces a bauxite supply problem

Thus, the European Union and domestic aluminum production are once again facing a problem. After the military coup in Guinea, the further supply of bauxite has become uncertain. China, which sources more than 80 million tons of its bauxite needs from Guinea, is also likely to become uneasy. Prices on the commodity exchanges have already reacted and have risen further.

Does the European Commission still know what it is doing?

Already in our hearing at the European Commission regarding the anti-dumping expiry review on stainless steel exports from China and Taiwan, we had massive doubts about the competence of the EC staff. This is also visible in current EC anti-dumping cases regarding aluminum imports.

On the one hand, the EC puts bauxite on the red list of critical raw materials, on the other hand, it opens anti-dumping proceedings against the import of aluminum at all, instead of sending a clear signal to the obviously selfish desire of individual lobbyists from the outset: “People with us not!”

Unfortunately, this is not an isolated case if one looks, for example, at the EC’s stance on other raw material and semi-finished product imports, such as nickel and stainless steel. More on this topic soon.

Bright spot of fairness on the horizon: CMA CGM suspends spot price increases

Major French logistics provider CMA CGM has suspended container spot price increases until further notice. This is a first glimmer of fairness on the horizon in the tense situation in the international logistics market.

AST: Timeframe for sale appears to be firming up

The final timeframe for the sale of Italian stainless steel producer Acciai Speciali Terni seems to be firming up. A pole position is also in the race for the winning bid. Currently, the Italian Arvedi Group is probably in first place.

And what moves you today?

What’s happening in your market right now? What events are driving you? Get in touch with us nowTalk to us. And remember to share the Stainless Espresso with your colleagues and friends, too. Sharing is caring.

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